"The missile is capable of intercepting short-range ballistic missiles, cruise missiles and fighter jets," a senior official in charge of the missile project at Chung-Shan Institute of Science and Technology, the island's arms development hub, told AFP.

"Together with US-made Patriot missiles, Tienkung III system will guard Taiwan's airspace in the next 15 to 20 years," said the official, surnamed Huang.

The institute also released a video to reporters visiting the tightly-guarded compound in northern Taiwan.

In the short film two Tienkung III missiles were fired from vertical launchers at the Chiupeng air base, soaring into the sky and destroying targets.

Huang declined to give specifications of the new missile, aimed at replacing the ageing US-made Hawk missiles -- but media speculated that Tienkung III has a range of up to 200 kilometres (124 miles).

The project is part of the island's efforts to build an air defence shield against any Chinese attacks.

According to Taiwan's defence ministry, China has more than 1,500 ballistic and cruise missiles trained on the island.

Taiwan split from China in 1949 after a civil war, but China sees it as part of its territory awaiting reunification -- by force if necessary.

Ties between China and Taiwan have improved markedly since Beijing-friendly President Ma Ying-jeou took office in 2008 and strengthened trade and other links, but fears of a Chinese invasion remain.